[Kereth]

I think the key is to allow superior products to be provided by players, with a few caveats.

1. Products produced by players must be superior -enough-, and truly exclusive to being provided by another player. This means slight improvements that will easily covered up by other gear at leveling may not be enough, particularly in terms of a smaller community. Also, if items sold back to vendors just go into the shop inventory, there is no need to go browsing players for the items, when they can still be bought at a shop for more. Dealing with other players, rather than npcs, is a great expenditure of time, which can make up for the difference in gold cost, favoring relations with npcs.

2. Products must be sufficiently rare. If your supply of products is too high, the crafters are making more than they need and obviously selling them to shops to cover the excess. Plus, this means that any given crafter can probably produce the item, or it can be made available in a shop, so when they produce a high quality item, it isn't worth their while to sell it, as all the other crafters would offer competitive prices, and again, make it not worth the expenditure of time involved in dealing with a pc.

Ultimately, playing a game is about spending time for the players, to produce gold and exp. If they can make 50% more gold dealing with another player, but have to spend 300% more time (usually even more, as deals with npcs are pretty fast), they'll skip it. Watch that balance, and you'll have it made.

-Kereth